2021 (9) TMI 1098 - AT - Service Tax

Refund of service tax paid under protest - provisional assessment or not - applicability of time limitation - short payment of duty and excess claim of refund - HELD THAT - The refund of any excess duty paid by any person is determined under Section 11B of the Central Excise Act. Section 11B prescribes a period of limitation of one year, however the said period of limitation is not applicable if the assessment is provisional. In the instant case, the claim of the respondent is that the assessment should have been deemed to be provisional as the final price was not determined at the time of provision of service and they had specially indicated in export/import applications that the service tax was paid under protest. The assessment cannot automatically turn provisional in absence following due procedures as prescribed under Rule 6 of Service Tax Rules. Since the assessment cannot be termed provisional in the instant case, the refund of ₹ 1,52,54,149/- claimed by the respondent is clearly barred by limitation - the order of Commissioner(Appeals) in respect of the said amount is therefore set aside. Allegation that the total amount recovered by the appellant at the material time was much higher than that paid by the respondent - HELD THAT - The issue regarding short payment of duty was also raised by corrigendum dt. 29/08/2007 issued by the Assistant Commissioner. As a result, it cannot be said that the show-cause notice did not raise any ground other than unjust enrichment. It is seen that the Order-in-Appeal did not examine the issue regarding the short payment of service tax during the month of February and March 2006 and has ignored the corrigendum to the show cause notice issued by the jurisdictional Assistant Commissioner - thus, the order of Commissioner(Appeals) is set aside on this count as well and the matter is remanded to the Commissioner(Appeals) for fresh adjudication after examining the corrigendum issued to the show-cause notice. The order of Commissioner(Appeals) is set aside in respect of the refund claim pertaining to ₹ 60 lakhs and the matter is remanded back to the Commissioner(Appeals) for examining the issue afresh and pass orders - appeal allowed by way of refund.

Summary

Issues Involved:
1. Refund claim of ?1,52,54,149/- barred by limitation.
2. Refund claim of ?60 lakhs and its admissibility.

Detailed Analysis:

1. Refund Claim of ?1,52,54,149/- Barred by Limitation:

The respondent filed a refund claim for service tax paid on wharfage charges for the period April 2005 to March 2006. The claim amounting to ?1,52,54,149/- was rejected by the original adjudicating authority on the ground of limitation under Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) allowed the refund, considering the assessment as provisional due to the price determination clause in the MOU between the service provider and the service recipients. The Commissioner (Appeals) relied on various Tribunal decisions to support this view, suggesting the assessment should be deemed provisional when the price is not final at the time of service provision.

However, the Appellate Tribunal noted that for an assessment to be considered provisional, the procedure under Rule 6 of the Service Tax Rules must be followed, which was not done in this case. The Tribunal cited the Supreme Court's decision in Metal Forgings v. Union of India, which emphasized the necessity of an order under Rule 9B for an assessment to be provisional. The Tribunal concluded that the assessment could not be deemed provisional in the absence of following due procedures, and thus, the refund claim was barred by limitation. The order of the Commissioner (Appeals) regarding the ?1,52,54,149/- refund was set aside.

2. Refund Claim of ?60 Lakhs and Its Admissibility:

The refund claim of ?60 lakhs was initially rejected on the grounds that the respondent had a shortfall in service tax payment for the period February and March 2006. The Commissioner (Appeals) held that the original authority could not reject the refund on grounds not invoked in the show-cause notice, which only raised the issue of unjust enrichment. The Commissioner (Appeals) remanded the matter to the original adjudicating authority for reconsideration of unjust enrichment.

The Appellate Tribunal observed that a corrigendum to the show-cause notice was issued, raising a specific charge regarding the inadmissibility of the ?60 lakhs refund. The Tribunal noted that the Commissioner (Appeals) did not consider this corrigendum in his order. Additionally, the Tribunal highlighted that the original adjudicating authority pointed out a significant shortfall in service tax payment during the relevant period, as detailed in the Order-in-Original.

Consequently, the Tribunal set aside the order of the Commissioner (Appeals) concerning the ?60 lakhs refund and remanded the matter for fresh adjudication, instructing the Commissioner (Appeals) to examine the issue afresh, including the corrigendum to the show-cause notice.

Conclusion:

The Appellate Tribunal set aside the Commissioner (Appeals) order regarding the refund claim of ?1,52,54,149/- due to the limitation period and non-provisional assessment. The Tribunal also set aside the order concerning the ?60 lakhs refund and remanded the matter for fresh adjudication, considering the corrigendum to the show-cause notice and the issue of short payment of service tax. The Tribunal emphasized the necessity of following procedural rules for provisional assessment and the importance of addressing all grounds raised in show-cause notices.